Microchip Technology 2025 Q4 Earnings Misses Targets as Net Income Falls 199.9%

Microchip Technology reported its fiscal 2025 Q4 earnings on May 08th, 2025. The company's net income fell sharply, marking a 199.9% decline compared to the previous year. Despite this setback, Microchip's revenue of $970.5 million exceeded analyst expectations, which were set at $962.76 million. The company adjusted its guidance for the June 2025 quarter, anticipating net sales between $1.02 billion and $1.07 billion, reflecting a positive outlook amid current market challenges.

Revenue
Microchip Technology's total revenue in the fourth quarter of fiscal 2025 was $970.50 million, representing a significant decline of 26.8% from the previous year's fourth quarter revenue of $1.33 billion.

Earnings/Net Income
Microchip swung to a loss of $0.29 per share in Q4 2025, contrasting with a profit of $0.29 per share in Q4 2024. The net loss of $-154.60 million was a stark reversal from the $154.70 million net income reported in the prior year, showcasing a challenging period for the company.

Price Action
The stock price of Microchip Technology has edged up 0.43% during the latest trading day, climbed 6.87% during the most recent full trading week, and surged 29.01% month-to-date.

Post-Earnings Price Action Review
The strategy of buying Microchip Technology (MCHP) shares after a revenue raise quarter-over-quarter and holding for 30 days has historically delivered a 33.19% return over the past five years, which is significantly lower than the benchmark return of 92.56%. The strategy provided conservative returns with an excess return of -59.37% and a compound annual growth rate (CAGR) of 5.92%. Despite managing risk effectively, the approach had a maximum drawdown of -57.93% and a Sharpe ratio of 0.14, indicating high volatility at 40.86%. This makes it suitable for investors seeking stability rather than aggressive growth.

CEO Commentary
Steve Sanghi, CEO and President of Microchip Technology, expressed optimism, noting that the March quarter revenue of $970.5 million surpassed guidance midpoint and may mark the industry's down cycle bottom. He emphasized the success of their nine-point plan in enhancing operational capabilities, including manufacturing efficiency and inventory management. Sanghi highlighted the company's positioning for future growth opportunities as market conditions evolve.

Guidance
Microchip Technology anticipates net sales for the June 2025 quarter to range between $1.02 billion and $1.07 billion. The company expects continued momentum in bookings and remains committed to enhancing shareholder value while maintaining dividend obligations as they transition back to growth.

Additional News
In recent developments, Microchip Technology announced a quarterly dividend on common stock at 45.5 cents per share, payable on June 5, 2025, to stockholders of record on May 22, 2025. Additionally, the company declared a dividend on its 7.50% Series A Mandatory Convertible Preferred Stock, payable on June 15, 2025. Meanwhile, Microchip has taken strategic financial actions, including reducing net debt by $1.30 billion through a mandatory convertible preferred offering, and amending its revolving line of credit for enhanced financial flexibility. These moves are aimed at maintaining the company’s investment-grade rating amidst current market challenges.